March 21, 2013

“Innovation is the adoption of a new practice in a community ”. Surprisingly, there is no mention in this definition of the words that spring to mind when we think of innovation – new ideas, creativity, invention, etc. The value of innovation is not the idea itself, but the benefit it brings to a community when a new practice is adopted.

Businesses use innovation on two levels:
• Getting customers to use their products or services
• Streamlining the processes used to create and deliver these products or services

An approach to address both levels of innovation has been evolving within industry over many years and is known as “Lean”. Researchers studying the global automotive industry 20 years ago discovered that Toyota was achieving significantly higher performance than it’s competitors on measures such as quality, delivery and productivity. They used the word “Lean” to describe the fit & healthy business processes that produced these results. The adoption of Lean has now spread far beyond its roots in manufacturing, particularly to many service businesses.

So what is Lean and how is it applied? Put simply, Lean is about delivering value to the customer with the minimum effort and resources. Improvement activity starts with gaining a deep understanding of what the customer values, then uses these insights to challenge how the product or service is designed, produced and delivered. The concept of value vs waste is a simple but powerful idea that helps expose which parts of our process add value and which are waste. And when we reduce waste in the process, this makes the work easier, the quality better and the delivery flow better to the customer.

There are many useful structured approaches to problem solving and process improvement that have developed as a part of Lean. A typical improvement activity follows the PDCA cycle:
Plan – select an important product or service and conduct a Value Stream Mapping workshop to define customer value, map the end-to-end process, identify value & waste, investigate root causes of waste, develop countermeasures and an achievable future state process and create an action plan.
Do – implement the changes (many small step improvements) as experiments in a trial phase.
Check – measure the results and conduct regular reviews during the trial period to highlight problems.
Adjust – use structured problem solving techniques to “error-proof” the problems.

So far I have highlighted the technical aspects of process improvement. However experienced practitioners will tell you that Lean is not just about tools and techniques (standardised work, one-piece flow, quick changeover, kanban, 5S etc). The more difficult challenge gets back to the definition “adoption of a new practice in a community” – the social aspects of Lean.

You don’t get anything for free, and improvement is hard work over and above the day to day. So how do you convince people to put in this effort when they are already working hard to put out the current fire? Lean actions speak louder than words. Leaders must dedicate time for cross functional teams to work on improvement. They must ensure that the purpose is clear – we are seeking benefits for both customers (improved quality, delivery and ease of use) and our workforce (reduced waste and effort, increased safety and job satisfaction). They must provide an effective method for improvement that delivers results. They must develop a leadership style based on respect, coaching and humility. They must have the resilience to learn from failures and sustain the momentum. Not easy, but the rewards are great.